Two major investment incentives are set to expire in 2011. These incentives offer tremendous opportunities for those in the market for horses, equipment or other farm additions.
100% Bonus Depreciation – allows purchasers to write off the entire cost of new qualified depreciable property if the property is put in service before 1/1/2012. Property is new if its original use commences with the purchaser. Examples of new property include yearlings, barns, and new tractors.
There are no investment limits with bonus depreciation as long as the property qualifies.
$500,000 Expense Allowance – allows purchasers to write off up to $500,000 of the cost of new or used qualified depreciable property if the property is put in service before 1/1/2012. The expense allowance applies more to used property this year since 100% bonus depreciation covers new property. An example of used property is a broodmare (pregnant or barren) because her original use was for racing. The purchaser of a pregnant mare simply puts her in service upon purchase; the purchaser of a barren mare must prepare her in 2011 to be bred in 2012.
There is a $2 million investment threshold for the expense allowance.
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